Iran war hits zinc market as China faces raw material disruption

Chinese zinc smelters are facing disruptions to shipments of raw materials from Iran, putting further strains on supplies after lower-than-expected deliveries from a major new mine in Russia.

Both Iran and Russia mainly ship their zinc concentrates — a form of semi-processed zinc ores — to smelters in China, as sanctions imposed by Western countries block off sales to other markets.

In the wake of the conflict in Iran, Chinese buyers have been informed that shipments of zinc concentrates set to leave the port city of Bandar Abbas have been called off, according to people familiar with the matter, who asked not to be identified due to the commercial sensitivity of the matter.

The war in Iran has highlighted a severe pinch point in global energy markets, but as the conflict drags on there are burgeoning risks to supplies in other commodities markets too. Aluminum and fertilizer prices have surged given the Middle East’s clout as a global supplier, while some nickel and copper producers outside the region depend on it for supplies of sulfur that pass through the Strait of Hormuz.

In the zinc market, mines in Iran and Russia collectively supply about 15% of China’s feedstock needs, according to an estimate by industry consultancy CRU Group. Both countries were set to expand production substantially this year, but Russia’s massive new Ozernoye mine has ramped up more slowly than expected, and now the conflict is throttling supplies from Iran.

“In 2026, the outlook remains uncertain for both countries,” said Olga Hepting, CRU’s head of zinc markets.

Bandar Abbas port opens into the Strait of Hormuz, and the city was an early target as the US and Israeli commenced air strikes on Iran. Some zinc buyers have also been informed that cargoes departing from ports in Oman — which is situated outside of the strait — had also been canceled, people familiar with the matter said.

Chinese customs data showed about 280,000 tons of zinc concentrates were imported last year from Iran and Oman, with Hepting noting that the latter country is used to ship out Iranian concentrates. Oman itself does not produce mined zinc, according to International Lead & Zinc Study Group.

Iran sits on abundant zinc and copper deposits but not all of its exports are captured officially, with some volumes being bartered for Chinese cars, as Bloomberg reported last year.

Chinese smelters are now looking for alternative feedstock to cover their needs over May and June, the people said, adding that buyers are also facing disruptions to supplies from Russia.

Russia’s zinc concentrates exports to China more than doubled to about 500,000 tonnes in 2025, with CRU estimating that more than half was coming from the Ozernoye mine, which became a target of US sanctions in late 2023. In recent months deliveries from the mine have fallen short of expectations, with Chinese buyers receiving cargoes of sub-standard quality in recent months, people familiar with the matter said.

The processing plant at the Ozernoye is operating in a gradual ramp-up mode and steadily increasing capacity while testing optimal technical parameters, a spokesperson for Areal Group, which manages the project, said in an emailed statement. The quality of the concentrate fully corresponds to the current stage of the project’s implementation schedule, she said.

(By Julian Luk)